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US Republican 'cranks’ threaten growth: Swan

Treasurer Wayne Swan says ‘‘cranks and crazies’’ in the US Republican Party are threatening economic growth as Congress remains deadlocked on tax increases and spending cuts set to take effect in January.

‘‘Let’s be blunt and acknowledge the biggest threat to the world’s biggest economy are the cranks and crazies that have taken over the Republican Party,’’ Mr Swan said in a speech in Sydney today. ‘‘Global markets are nervously watching the positioning of hardline elements of the Republican Party for signs that they will dangerously block reasonable attempts at compromise.’’

US lawmakers are deadlocked over how to resolve the so-called fiscal cliff, the combination of more than $US600 billion in automatic tax increases and spending cuts that will go into effect next year if Congress does nothing.

Federal Reserve chairman Ben Bernanke has said the issue is one of the main sources of risk for the US economy.

Republicans led by the anti-tax Tea Party movement wrested control of the US House of Representatives from Democrats in the 2010 mid-term election, picking up 63 seats for their biggest gain in 72 years. The movement’s clout was evident in primary races earlier this year in Indiana and Texas, where establishment-backed Republican officials were defeated by candidates eschewing political compromise.

‘‘With the world watching, it is imperative that the US Congress resolve an agreement to support growth in the short term,’’ said Mr Swan.

'Calculated insult'

The opposition criticised Mr Swan’s comments on the Republican Party as a ‘‘calculated insult’’.

‘‘He is showing reckless disregard for the debt burden the US faces,’’ the Australian newspaper cited Julie Bishop, the opposition foreign affairs spokeswoman, as saying. ‘‘It was a calculated insult to the elected representatives of our key ally.’’

Prime Minister Julia Gillard defended Mr Swan’s comments when asked by reporters whether they would affect her government’s ability to work with the Republicans if presidential nominee Mitt Romney wins office.

‘‘What happens in the US economy matters to the world economy,’’ Ms Gillard said today in Sydney. ‘‘The Treasurer’s been making appropriate comments about potential risks to the global economy.’’

Mr Swan’s foray into US politics comes after he depicted New Jersey last month as a down-trodden place where workers get ‘‘thrown on the scrap heap of life’’ - prompting a backlash from state officials.

‘‘If I could distill the relevance of Bruce Springsteen’s music to Australia it would be this: Don’t let what has happened to the American economy happen here,’’ Mr Swan said in a speech in Melbourne last month. ‘‘Don’t let Australia become a down-under version of New Jersey, where the people and the communities whose skills are no longer in demand get thrown on the scrap heap of life.’’

Tom Kean, the top Republican in the New Jersey state legislature, hit back at Mr Swan’s comments at the time, saying they were down to ‘‘the electoral silly season.’’